Nursing home firm hit with $670-million judgment

A Humboldt County jury orders Skilled Healthcare Group to pay damages for understaffing at its 22 assisted-living facilities in California.

By Nathan Olivarez-Giles - July 8, 2010

Nursing home operator Skilled Healthcare Group Inc. was ordered Tuesday to pay more than $670 million in damages for understaffing at its 22 assisted-living facilities in California.

The verdict against the Foothill Ranch company came in Humboldt County Superior Court in a class-action lawsuit brought by patients and family members. The jury found that Skilled Healthcare violated the California health and safety code that requires nursing homes to maintain 3.2 nursing hours per patient per day, said Tim Needham, one of the plaintiff group's lawyers.

The jury imposed the maximum damages for violating the state statues, plus $58 million in restitution, according to a company statement.

But more damages are possible. The jury will begin meeting next week to determine whether Skilled Healthcare should also pay punitive damages.

The company said in a statement it will appeal.

"We are deeply disappointed in the verdict," Boyd Hendrickson, chief executive of Skilled Healthcare, said in the statement. "We strongly disagree with the outcome of this legal matter, and we intend to vigorously challenge it."

News of the verdict caused the publicly held company's stock price to plunge nearly 75%, to $1.52.

The company has about 14,000 employees. In the first quarter, it had about $189 million in revenue and a profit of $8.9 million, according to a filing with the Securities and Exchange Commission.

Needham said the deficiencies in staffing levels put patients in peril. "The company knows that this lack of staffing causes a higher risk of problems for patients," he said. "Call lights don't get answered, persons don't get proper hygiene, persons don't get their medications on time or the care they need."

The suit only applies to assisted-living facilities operated by the company in California. Skilled Healthcare owns others in Arizona, Iowa, Kansas, Missouri, Nevada, New Mexico and Texas.reprinted from the Los Angeles Times